Federal Register / Vol. 71, No. 19 / Monday, January 30, 2006 / Rules and Regulations 4815 

value method, effective for the current 

taxable year. For purposes of determining the 

tax book value of its section 168 property, the 

taxpayer’s depreciation deduction is 

determined by applying the method, 

convention, and recovery period rules of the 

alternative depreciation system under section 

168(g)(2) as in effect in 2005 to the taxpayer’s 

original cost basis in such property. In 2006, 

the taxpayer acquires and places in service in 

the United States new section 168 property. 

The tax book value of this section 168 

property is determined under the rules of 

section 168(g)(2) applicable to property 

placed in service in 2006. 

Example 2. Assume the same facts as in 

Example 1, except that the taxpayer revokes 

the alternative tax book value method 

election effective for taxable year 2010. 

Additionally, in 2011, the taxpayer acquires 

new section 168 property and places it in 

service in the United States. If the taxpayer 

elects to use the alternative tax book value 

method effective for taxable year 2012, the 

taxpayer must determine the tax book value 

of its section 168 property as though the prior 

election still applied. Thus, the tax book 

value of property placed in service prior to 

2005 would be determined by applying the 

method, convention, and recovery period 

rules of the alternative depreciation system 

under section 168(g)(2) applicable to 

property placed in service in 2005. The tax 

book value of section 168 property placed in 

service during any taxable year after 2004 

would be determined by applying the 

method, convention, and recovery period 

rules of the alternative depreciation system 

under section 168(g)(2) applicable to 

property placed in service in such taxable 

year. 

(2) Timing and scope of election. (i) 

Except as provided in this paragraph 

(i)(2), a taxpayer may elect to use the 

alternative tax book value method with 

respect to any taxable year beginning on 

or after March 26, 2004. However, 

pursuant to § 1.861–8T(c)(2), a taxpayer 

that has elected the fair market value 

method must obtain the consent of the 

Commissioner prior to electing the 

alternative tax book value method. Any 

election made pursuant to this 

paragraph (i)(2) shall apply to all 

members of an affiliated group of 

corporations as defined in §§ 1.861–

11(d) and 1.861–11T(d). Any election 

made pursuant to this paragraph (i)(2) 

shall apply to all subsequent taxable 

years of the taxpayer unless revoked by 

the taxpayer. Revocation of such an 

election, other than in conjunction with 

an election to use the fair market value 

method, for a taxable year prior to the 

sixth taxable year for which the election 

applies requires the consent of the 

Commissioner. 

(ii) Example. The provisions of this 

paragraph (i)(2) are illustrated in the 

following example: 

Example. Corporation X, a calendar year 

taxpayer, elects on its original, timely filed 

tax return for the taxable year ending 

December 31, 2007, to use the alternative tax 

book value method for its 2007 year. The 

alternative tax book value method applies to 

Corporation X’s 2007 year and all subsequent 

taxable years. Corporation X may not, 

without the consent of the Commissioner, 

revoke its election and determine tax book 

value using a method other than the 

alternative tax book value method with 

respect to any taxable year beginning before 

January 1, 2012. However, Corporation X 

may automatically elect to change from the 

alternative tax book value method to the fair 

market value method for any open year. 

(3) Certain other adjustments. 

[Reserved.] 

(4) Effective date. This paragraph (i) 

applies to taxable years beginning on or 

after March 26, 2004. 

(j) [Reserved]. For further guidance, 

see § 1.861–9T(j). 

■ Par. 3. Section 1.861–9T is amended 

as follows: 

■ 1. Revise the second sentence in 

paragraph (g)(1)(ii) introductory text. 

■ 2. Revise paragraph (i). 

The revisions read as follows: 

§ 1.861–9T Allocation and apportionment 

of interest expense (temporary). 

* * * * * 

(g) * * * 

(1) * * * 

(ii) * * * For rules concerning the 

application of an alternative method of 

valuing assets for purposes of the tax 

book value method, see § 1.861–9(i). 

* * * 

* * * * * 

(i) [Reserved]. For further guidance, 

see § 1.861–9(i). 

* * * * * 

Approved: January 20, 2006. 

Mark E. Matthews, 

Deputy Commissioner for Services and 

Enforcement. 

Eric Solomon, 

Acting Deputy Assistant Secretary of the 

Treasury. 

[FR Doc. 06–766 Filed 1–27–06; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 301 

[TD 9246] 

RIN 1545–BD37 

Clarification of Definitions 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Final regulations. 

SUMMARY: This document contains final 

regulations defining the terms 

corporation and domestic in 

circumstances in which a business 

entity is created or organized in more 

than one jurisdiction. These regulations 

affect business entities that are created 

or organized under the laws of more 

than one jurisdiction. 

DATES: Effective Date: These regulations 

are effective January 30, 2006. 

Applicability Dates: For the dates of 

applicability of these regulations, see 

§§ 301.7701–2(e)(3) and 301.7701–5(c). 

FOR FURTHER INFORMATION CONTACT: 

Thomas Beem, (202) 622–3860 (not a 

toll-free number). 

SUPPLEMENTARY INFORMATION: 

Background 

On August 12, 2004, the IRS and 

Treasury issued temporary regulations 

(TD 9153), 69 FR 49809, and a notice of 

proposed rulemaking (REG–124872–04), 

69 FR 49840, regarding the classification 

of business entities that are created or 

organized under the laws of more than 

one jurisdiction (dually chartered 

entities). 

Under the provisions of the temporary 

and proposed regulations, classification 

of a dually chartered entity involves two 

independent determinations: (1) 

Whether the entity is a corporation; and 

(2) whether the entity is domestic or 

foreign. The entity is a corporation 

under § 301.7701–2T(b)(9) if its form of 

organization in any one of the 

jurisdictions in which it is created or 

organized would cause it to be treated 

as a corporation under § 301.7701–2(b). 

The entity is domestic under 

§ 301.7701–5T if it is organized as any 

kind of entity in the United States or 

under the law of the United States or of 

any State. The temporary regulations 

were effective for all entities existing on 

or after August 12, 2004. 

The public hearing concerning the 

proposed regulations was canceled 

because no requests to speak were 

received. However, the IRS and 

Treasury received several written 

comments on the temporary and 

proposed regulations, which are 

discussed below. 

Explanation of Provisions 

A. Dates of Application 

The preamble to the temporary and 

proposed regulations notes that the IRS 

and Treasury consider the regulations to 

be a clarification of the entity 

classification rules as they existed prior 

to the issuance of the temporary and 

proposed regulations (pre-existing 

regulations). This belief is based on the 

view that, even absent these regulations, 

a proper application of the pre-existing 

regulations produces the same result as 


cprice-sewell on PROD1PC66 with RULES
4816 Federal Register / Vol. 71, No. 19 / Monday, January 30, 2006 / Rules and Regulations 

the rules of the temporary and proposed 

regulations. Some commentators suggest 

that this discussion in the preamble to 

the temporary and proposed regulations 

indicates that the regulations apply 

prior to August 12, 2004, and thus the 

rules are retroactive in their effect. 

Also, all of the commentators note 

that while the temporary and proposed 

rules are a reasonable interpretation of 

the statute and the pre-existing 

regulations, other reasonable 

interpretations of the pre-existing 

regulations are also possible and that 

some taxpayers classified their dually 

chartered entities under those other 

interpretations. Therefore, the 

commentators question whether it is 

appropriate to view the temporary and 

proposed regulations as a clarification of 

the existing regulations. Further, the 

commentators state that where 

taxpayers have reasonably relied on an 

alternative interpretation of the existing 

regulations, the immediate application 

of the temporary regulations cause an 

unexpected change in the classification 

of those taxpayers’ dually chartered 

entities, often with adverse tax 

consequences. Moreover, the 

commentators point out that the tax 

costs of converting a dually chartered 

entity from this unexpected 

classification to the taxpayer’s desired 

classification could be significant and 

could, in some instances, effectively 

prevent the taxpayer from undertaking 

the conversion. For these reasons, all 

the commentators object to the effective 

date provisions of the temporary 

regulations and they request that the 

final regulations provide either a 

transition period before the rules take 

effect, or a rule that exempts dually 

chartered entities that were in existence 

on August 12, 2004, from the 

application of the rules. 

Neither the temporary regulations nor 

these final regulations are retroactive. 

The earliest date that any entity is 

subject to these regulations is August 

12, 2004. For periods prior to the date 

these final regulations apply (i.e., prior 

to August 12, 2004), the classification of 

dually chartered entities is governed by 

the pre-existing regulations. Further, 

based upon the comments discussed 

above, but without any inference 

intended as to the proper interpretation 

of the pre-existing regulations, the IRS 

and Treasury conclude that, while the 

final regulations generally are effective 

as of August 12, 2004, a transition rule 

is appropriate. The transition rule 

provides that for dually chartered 

entities existing on August 12, 2004, the 

provisions of this final regulation apply 

as of May 1, 2006. The IRS and Treasury 

recognize that taxpayers eligible for the 

transition rule may have completed 

transactions after August 12, 2004, 

relying upon the temporary regulations 

and therefore these taxpayers may rely 

upon the final regulations as of August 

12, 2004. 

B. Effect on Dually Chartered Entities 

Not Organized Anywhere as Per Se 

Corporations 

Several commentators state that it is 

unclear whether § 301.7701–2T(b)(9) 

applies in the case of a dually chartered 

entity not created or organized in any 

jurisdiction in a manner that would 

cause it to be treated as a per se 

corporation. A per se corporation is an 

entity described in § 301.7701–2(b)(1), 

(3), (4), (5), (6), (7), or (8), and thus is 

not an eligible entity as defined in 

§ 301.7701–3(a). A per se corporation is, 

therefore, ineligible to elect its 

classification. 

Even though a dually chartered entity 

is not created or organized anywhere in 

a manner that would cause it to be 

classified as a per se corporation, it is 

still necessary to classify the entity. For 

example, a dually chartered entity may 

be organized in one jurisdiction in 

manner that would result in a default 

classification as a corporation and in 

another jurisdiction in a manner that 

would result in a default classification 

as a partnership. Absent an election, a 

rule is necessary to resolve the 

conflicting default classifications. 

Therefore, the regulation and examples 

have been modified to clarify that the 

rules apply even in circumstances in 

which the entity is not organized 

anywhere in a manner that would make 

it a per se corporation. 

Several commentators state that even 

if a dually chartered entity is not created 

or organized in any jurisdiction as a per 

se corporation, § 301.7701–2T(b)(9) 

could be interpreted as making the 

entity a per se corporation in some 

circumstances and thus prohibiting the 

entity from electing its classification. 

According to these commentators, this 

occurs because the literal language of 

the regulation only considers an entity’s 

default classification at the time of its 

formation and ignores any entity 

classification election under 

§ 301.7701–3 that would otherwise 

apply to the entity at the time the entity 

classification determination is made. 

The regulations are not intended to 

operate in that manner. Therefore, a 

sentence is added to § 301.7701–2(b)(9) 

of the final regulations to clarify that a 

dually chartered entity that is an eligible 

entity in each jurisdiction in which it is 

created or organized will continue to be 

considered an eligible entity under 

§ 301.7701–3(a). In addition, the 

examples were modified to illustrate 

this provision. 

The proposed regulations under 

section 7701 are adopted as modified by 

this Treasury decision and the 

preceding temporary regulations are 

removed. 

Special Analyses 

It has been determined that this 

Treasury decision is not a significant 

regulatory action as defined in 

Executive Order 12866. Therefore, a 

regulatory assessment is not required. It 

also has been determined that section 

553(b) of the Administrative Procedure 

Act (5 U.S.C. chapter 5) does not apply 

to these regulations, and because these 

regulations do not impose a collection 

of information on small entities, the 

provisions of the Regulatory Flexibility 

Act (5 U.S.C. chapter 6) do not apply. 

Pursuant to section 7805(f) of the 

Internal Revenue Code, the temporary 

and proposed regulations that preceded 

these regulations were submitted to the 

Chief Counsel for Advocacy of the Small 

Business Administration for comments 

on its impact on small business. 

Drafting Information 

The principal author of these 

regulations is Thomas Beem of the 

Office of Associate Chief Counsel 

(International). However, other 

personnel from IRS and Treasury 

participated in their development. 

List of Subjects in 26 CFR Part 301 

Employment taxes, Estate taxes, 

Excise taxes, Gift taxes, Income taxes, 

Penalties, Reporting and Recordkeeping 

requirements. 

Amendments to the Regulations 

■ Accordingly, 26 CFR part 301 is 

amended as follows: 

PART 301—PROCEDURE AND 

ADMINISTRATION 

■ Paragraph 1. The authority citation 

for part 301 continues to read, in part, 

as follows: 

Authority: 26 U.S.C. 7805 * * * 

■ Par. 2. In § 301.7701–1, paragraph (d) 

is revised to read as follows: 

§ 301.7701–1 Classification of 

organizations for Federal tax purposes. 

* * * * * 

(d) Domestic and foreign business 

entities. See § 301.7701–5 for the rules 

that determine whether a business 

entity is domestic or foreign. 

* * * * * 


cprice-sewell on PROD1PC66 with RULES
Federal Register / Vol. 71, No. 19 / Monday, January 30, 2006 / Rules and Regulations 4817 

§ 301.7701–1T [Removed] 

■ Par. 3. Section 301.7701–1T is 

removed. 

■ Par. 4. In § 301.7701–2, paragraphs 

(b)(9) and (e)(3) are revised to read as 

follows: 

§ 301.7701–2 Business entities; 

definitions. 

* * * * * 

(b)(9) Business entities with multiple 

charters. (i) An entity created or 

organized under the laws of more than 

one jurisdiction if the rules of this 

section would treat it as a corporation 

with reference to any one of the 

jurisdictions in which it is created or 

organized. Such an entity may elect its 

classification under § 301.7701–3, 

subject to the limitations of those 

provisions, only if it is created or 

organized in each jurisdiction in a 

manner that meets the definition of an 

eligible entity in § 301.7701–3(a). The 

determination of a business entity’s 

corporate or non-corporate classification 

is made independently from the 

determination of whether the entity is 

domestic or foreign. See § 301.7701–5 

for the rules that determine whether a 

business entity is domestic or foreign. 

(ii) Examples. The following 

examples illustrate the rule of this 

paragraph (b)(9): 

Example 1. (i) Facts. X is an entity with a 

single owner organized under the laws of 

Country A as an entity that is listed in 

paragraph (b)(8)(i) of this section. Under the 

rules of this section, such an entity is a 

corporation for Federal tax purposes and 

under § 301.7701–3(a) is unable to elect its 

classification. Several years after its 

formation, X files a certificate of 

domestication in State B as a limited liability 

company (LLC). Under the laws of State B, 

X is considered to be created or organized in 

State B as an LLC upon the filing of the 

certificate of domestication and is therefore 

subject to the laws of State B. Under the rules 

of this section and § 301.7701–3, an LLC with 

a single owner organized only in State B is 

disregarded as an entity separate from its 

owner for Federal tax purposes (absent an 

election to be treated as an association). 

Neither Country A nor State B law requires 

X to terminate its charter in Country A as a 

result of the domestication, and in fact X 

does not terminate its Country A charter. 

Consequently, X is now organized in more 

than one jurisdiction. 

(ii) Result. X remains organized under the 

laws of Country A as an entity that is listed 

in paragraph (b)(8)(i) of this section, and as 

such, it is an entity that is treated as a 

corporation under the rules of this section. 

Therefore, X is a corporation for Federal tax 

purposes because the rules of this section 

would treat X as a corporation with reference 

to one of the jurisdictions in which it is 

created or organized. Because X is organized 

in Country A in a manner that does not meet 

the definition of an eligible entity in 

§ 301.7701–3(a), it is unable to elect its 

classification. 

Example 2. (i) Facts. Y is an entity that is 

incorporated under the laws of State A and 

has two shareholders. Under the rules of this 

section, an entity incorporated under the 

laws of State A is a corporation for Federal 

tax purposes and under § 301.7701–3(a) is 

unable to elect its classification. Several 

years after its formation, Y files a certificate 

of continuance in Country B as an unlimited 

company. Under the laws of Country B, upon 

filing a certificate of continuance, Y is treated 

as organized in Country B. Under the rules 

of this section and § 301.7701–3, an 

unlimited company organized only in 

Country B that has more than one owner is 

treated as a partnership for Federal tax 

purposes (absent an election to be treated as 

an association). Neither State A nor Country 

B law requires Y to terminate its charter in 

State A as a result of the continuance, and 

in fact Y does not terminate its State A 

charter. Consequently, Y is now organized in 

more than one jurisdiction. 

(ii) Result. Y remains organized in State A 

as a corporation, an entity that is treated as 

a corporation under the rules of this section. 

Therefore, Y is a corporation for Federal tax 

purposes because the rules of this section 

would treat Y as a corporation with reference 

to one of the jurisdictions in which it is 

created or organized. Because Y is organized 

in State A in a manner that does not meet the 

definition of an eligible entity in § 301.7701–

3(a), it is unable to elect its classification. 

Example 3. (i) Facts. Z is an entity that has 

more than one owner and that is recognized 

under the laws of Country A as an unlimited 

company organized in Country A. Z is 

organized in Country A in a manner that 

meets the definition of an eligible entity in 

§ 301.7701–3(a). Under the rules of this 

section and § 301.7701–3, an unlimited 

company organized only in Country A with 

more than one owner is treated as a 

partnership for Federal tax purposes (absent 

an election to be treated as an association). 

At the time Z was formed, it was also 

organized as a private limited company 

under the laws of Country B. Z is organized 

in Country B in a manner that meets the 

definition of an eligible entity in § 301.7701–

3(a). Under the rules of this section and 

§ 301.7701–3, a private limited company 

organized only in Country B is treated as a 

corporation for Federal tax purposes (absent 

an election to be treated as a partnership). 

Thus, Z is organized in more than one 

jurisdiction. Z has not made any entity 

classification elections under § 301.7701–3. 

(ii) Result. Z is organized in Country B as 

a private limited company, an entity that is 

treated (absent an election to the contrary) as 

a corporation under the rules of this section. 

However, because Z is organized in each 

jurisdiction in a manner that meets the 

definition of an eligible entity in § 301.7701–

3(a), it may elect its classification under 

§ 301.7701–3, subject to the limitations of 

those provisions. 

Example 4. (i) Facts. P is an entity with 

more than one owner organized in Country 

A as a general partnership. Under the rules 

of this section and § 301.7701–3, an eligible 

entity with more than one owner in Country 

A is treated as a partnership for federal tax 

purposes (absent an election to be treated as 

an association). P files a certificate of 

continuance in Country B as an unlimited 

company. Under the rules of this section and 

§ 301.7701–3, an unlimited company in 

Country B with more than one owner is 

treated as a partnership for federal tax 

purposes (absent an election to be treated as 

an association). P is not required under either 

the laws of Country A or Country B to 

terminate the general partnership in Country 

A, and in fact P does not terminate its 

Country A partnership. P is now organized in 

more than one jurisdiction. P has not made 

any entity classification elections under 

§ 301.7701–3. 

(ii) Result. P’s organization in both Country 

A and Country B would result in P being 

classified as a partnership. Therefore, since 

the rules of this section would not treat P as 

a corporation with reference to any 

jurisdiction in which it is created or 

organized, it is not a corporation for federal 

tax purposes. 

* * * * * 

(e) * * * 

(3)(i) General rule. Except as provided 

in paragraph (e)(3)(ii) of this section, the 

rules of paragraph (b)(9) of this section 

apply as of August 12, 2004, to all 

business entities existing on or after that 

date. 

(ii) Transition rule. For business 

entities created or organized under the 

laws of more than one jurisdiction as of 

August 12, 2004, the rules of paragraph 

(b)(9) of this section apply as of May 1, 

2006. These entities, however, may rely 

on the rules of paragraph (b)(9) of this 

section as of August 12, 2004. 

* * * * * 

§ 301.7701–2T [Removed] 

■ Par. 5. Section 301.7701–2T is 

removed. 

■ Par. 6. Section 301.7701–5 is revised 

to read as follows: 

§ 301.7701–5 Domestic and foreign 

business entities. 

(a) Domestic and foreign business 

entities. A business entity (including an 

entity that is disregarded as separate 

from its owner under § 301.7701–2(c)) is 

domestic if it is created or organized as 

any type of entity (including, but not 

limited to, a corporation, 

unincorporated association, general 

partnership, limited partnership, and 

limited liability company) in the United 

States, or under the law of the United 

States or of any State. Accordingly, a 

business entity that is created or 

organized both in the United States and 

in a foreign jurisdiction is a domestic 

entity. A business entity (including an 

entity that is disregarded as separate 

from its owner under § 301.7701–2(c)) is 

foreign if it is not domestic. The 


cprice-sewell on PROD1PC66 with RULES
4818 Federal Register / Vol. 71, No. 19 / Monday, January 30, 2006 / Rules and Regulations 

determination of whether an entity is 

domestic or foreign is made 

independently from the determination 

of its corporate or non-corporate 

classification. See §§ 301.7701–2 and 

301.7701–3 for the rules governing the 

classification of entities. 

(b) Examples. The following examples 

illustrate the rules of this section: 

Example 1. (i) Facts. Y is an entity that is 

created or organized under the laws of 

Country A as a public limited company. It is 

also an entity that is organized as a limited 

liability company (LLC) under the laws of 

State B. Y is classified as a corporation for 

Federal tax purposes under the rules of 

§§ 301.7701–2, and 301.7701–3. 

(ii) Result. Y is a domestic corporation 

because it is an entity that is classified as a 

corporation and it is organized as an entity 

under the laws of State B. 

Example 2. (i) Facts. P is an entity with 

more than one owner organized under the 

laws of Country A as an unlimited company. 

It is also an entity that is organized as a 

general partnership under the laws of State 

B. P is classified as a partnership for Federal 

tax purposes under the rules of §§ 301.7701–

2, and 301.7701–3. 

(ii) Result. P is a domestic partnership 

because it is an entity that is classified as a 

partnership and it is organized as an entity 

under the laws of State B. 

(c) Effective date.—(1) General rule. 

Except as provided in paragraph (c)(2) 

of this section, the rules of this section 

apply as of August 12, 2004, to all 

business entities existing on or after that 

date. 

(2) Transition rule. For business 

entities created or organized under the 

laws of more than one jurisdiction as of 

August 12, 2004, the rules of this 

section apply as of May 1, 2006. These 

entities, however, may rely on the rules 

of this section as of August 12, 2004. 

§ 301.7701–5T [Removed] 

■ Par. 7. Section 301.7701–5T is 

removed. 

Approved: January 17, 2006. 

Mark E. Matthews, 

Deputy Commissioner for Services and 

Enforcement. 

Eric Solomon, 

Acting Deputy Assistant Secretary of the 

Treasury. 

[FR Doc. 06–817 Filed 1–27–06; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF DEFENSE 

Office of the Secretary 

32 CFR Part 392 

[DoD Instruction 5134.04] 

Director of Small and Disadvantaged 

Business Utilization 

AGENCY: Department of Defense. 

ACTION: Final rule. 

SUMMARY: This document removes 

regulations from Title 32 of the Code of 

Federal Regulations concerning the 

Director of Small and Disadvantaged 

Business Utilization. This part has 

served the purpose for which it was 

intended in the CFR and is no longer 

necessary. 

EFFECTIVE DATE: January 30, 2006. 

FOR FURTHER INFORMATION CONTACT: L.M. 

Bynum (703) 696–4970. 

SUPPLEMENTARY INFORMATION: The 

revised DoD Instruction 5134.04 is 

available at http://www.dtic.mil/whs/ 

directives/corres/html/513404.htm. 

List of Subjects in 32 CFR Part 392 

Organizations. 

PART 392—[REMOVED] 

■ Accordingly, by the authority of 10 

U.S.C. 301, 32 CFR part 392 is removed. 

Dated: January 24, 2006. 

L.M. Bynum, 

Alternate OSD Federal Register Liaison 

Officer, Department of Defense. 

[FR Doc. 06–814 Filed 1–27–06; 8:45 am] 

BILLING CODE 5001–06–M 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

33 CFR Part 165 

[COTP Honolulu 06–002] 

RIN 1625–AA87 

Security Zone; Pearl Harbor and 

Adjacent Waters, Honolulu, HI 

AGENCY: Coast Guard, DHS. 

ACTION: Temporary final rule. 

SUMMARY: This temporary rule 

establishes a 500-yard moving security 

zone around the U.S. Forces vessel 

SBX–1 during transit and float-off 

operations in the waters adjacent to 

Pearl Harbor, HI. The SBX–1 will transit 

aboard the M/V BLUE MARLIN and will 

be floated-off and escorted into Pearl 

Harbor. This security zone is necessary 

to protect the SBX–1 from hazards 

associated with other vessels or persons 

approaching too close during the transit, 

float-off, and escort operations. Entry of 

persons or vessels into this temporary 

security zone is prohibited unless 

authorized by the Captain of the Port 

(COTP). 

DATES: This rule is effective from 12 

a.m. (HST) on January 13, 2006 to 11:59 

p.m. (HST) on January 31, 2006. 

ADDRESSES: Documents indicated in this 

preamble as being available in the 

docket are part of docket COTP 

Honolulu 06–002 and are available for 

inspection or copying at Coast Guard 

Sector Honolulu between 7 a.m. and 

3:30 p.m., Monday through Friday, 

except Federal holidays. 

FOR FURTHER INFORMATION CONTACT: 

Lieutenant (Junior Grade) Quincey 

Adams, U.S. Coast Guard Sector 

Honolulu at (808) 842–2600. 

SUPPLEMENTARY INFORMATION: 

Regulatory Information 

We did not publish a notice of 

proposed rulemaking (NPRM) for this 

regulation. Under 5 U.S.C. 553(b)(B), the 

Coast Guard finds that good cause exists 

for not publishing an NPRM. The Coast 

Guard was not given the final voyage 

plan in time to initiate full rulemaking, 

and the need for this temporary security 

zone was not determined until less than 

30 days before the SBX–1 will require 

the zone’s protection. Publishing an 

NPRM and delaying the effective date 

would be contrary to the public interest 

since the transit would occur before the 

rulemaking process was complete, 

thereby jeopardizing the security of the 

people and property associated with the 

operation. Under 5 U.S.C. 553(d)(3), the 

Coast Guard finds that good cause exists 

for making this rule effective less than 

30 days after publication in the Federal 

Register. The COTP finds this good 

cause to be the immediate need for a 

security zone to allay the waterborne 

security threats surrounding the SBX–

1’s transit. 

Background and Purpose 

On January 9, 2006, U.S. Forces vessel 

SBX–1 entered the Honolulu Captain of 

the Port Zone while attached to the 

loading platform of M/V BLUE 

MARLIN. COTP Honolulu Order 06–001 

established a security zone to protect its 

float-off and transit into Pearl Harbor, HI 

(165.T14–131 Security Zone; Pearl 

Harbor and adjacent waters, Honolulu, 

HI). 

That temporary final rule expired on 

January 12, 2006 at 11:59 p.m. The Navy 

contacted the Coast Guard that day to 


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